Legislation raising financial reporting thresholds for Pennsylvania not-for-profit organizations was recently signed into law. PA Act 104 of 2026, which was passed unanimously by the PA House of Representatives before reaching Governor Shapiro, was intended to reduce the financial burden of reporting costs for nonprofits in the state. This legislative action follows a national trend of reporting thresholds being modernized. In the last five years, the federal single audit threshold, as well as state requirement thresholds in New Jersey, New York and Maryland, were increased.
What Changed?
Annual contributions dictate state requirements for reporting. Pennsylvania has four tiers of reporting requirements, which were each increased by the Act.
| Requirement | Before PA Act 104 | After PA Act 104 | Threshold Increase |
| Audit Required | Annual contributions of $750,000 or more | Annual contributions of $1,000,000 or more | +$250,000 |
| Review or Audit Required | Annual contributions of at least $250,000 but less than $750,000 | Annual contributions of at least $500,000 but less than $1,000,000 | +$250,000 |
| Compilation, Review, or Audit Required | Annual contributions of at least $100,000 but less than $250,000 | Annual contributions of at least $150,000 but less than $500,000 | +$50,000 |
| CPA Engagement Optional | Annual contributions of less than $100,000 | Annual contributions of less than $150,000 | +$50,000 |
When Does the Change Take Effect?
The new requirements become effective February 19, 2027, 120 days after the bill was signed.
What Does This Mean for Your Nonprofit Organization?
Organizations should evaluate whether the revised thresholds affect their financial reporting requirements. It’s important to note that these thresholds are only one factor in determining the appropriate level of financial reporting. Other state and federal requirements may still apply. Funding agreements, debt covenants, board governance policies, and donor expectations may also necessitate a higher level of financial reporting than required by Pennsylvania law alone.
Organizations should consult with their accountants and advisors to determine whether the new thresholds impact their reporting obligations and determine if changes to their current financial reporting approach are appropriate.
